9911796707
TMI Blog2019 (1) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. Further in respect of the Mr. Assem Kumar Gupta, as has been submitted hereinabove, in his statement there is no allegation whatsoever qua the assessee and further his statement is factually incorrect and also his statement was also recorded in the forced circumstances and lastly despite the specific requested he has not been confronted for the cross examination. In fact, on the basis of the independent enquiry conducted by the learned AO, aforesaid broker has confirmed the factum of sale and purchase of the shares, in such circumstances, the statement of Shri. Aseem Kumar Gupta is of no much credence, more so when he has also not been confronted for the cross examination of the assessee, despite specific request. It is settled law that where addition of undisclosed income was made on basis of mere statement under section 132(4) which was not corroborated by any material evidence, neither such statement would be a conclusive evidence, nor any addition could be made. In the instant case, since the surrender was made under pressure which was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search operation u/s 132 was illegal; iii) in holding that there was no violation of the principles of natural justice by the A.O in completing the assessment without giving adequate opportunity and issuing show cause regarding the additions made; iv) in confirming the addition of ₹ 86,15,583/- as unexplained cash credit u/s 68 of the I.T. Act ignoring the facts and material evidences to the effect that the amount was long term capital gain exempt u/s 10 (38) of the Act; v) in confirming the interest charged by the AO u/s 234A and 234B of the Act; Above actions being arbitrary, erroneous and unjust be quashed with directions for relief. Grounds raised in A.Y. 2007-08: 1. On the facts and in the circumstances of the case, Id. CIT (A) erred:- i) In holding that there was no infirmity in the action of the A.O. assuming jurisdiction and passing order u/s 153A/143 (3) of the Income-tax Act despite the fact that there was no undisclosed income and no materials found during the search showing undisclosed income; ii) in declining to justly and fairly adjudicate Appellant's contention that since there was no separate search warrant in Appellant's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount (Rs.) Sudama Trading & Investment Ltd. 15.04.2004 1,95,600/- 24.11.2005 47,03,772/- 29.11.2005 41,07,409/- Total ₹ 1,95,600/- Rs.88,11,181/- A.Y. 2007-08: Name Purchase Cost (Rs.) Sold Amount (Rs.) Basukinath Coal Pvt. Ltd. Amalgamated into Blue Print Securities Ltd. 152000 shares issued in lieu of 19000 shares 04.05.2005 1,91,046/- 13.02.2007 to 05.03.2007 4,66,75,800/- Konark Commerce & Invest. Ltd. 23.05.2005 17,46,562/- 13.02.2007 to 21.02.2007 48,73,500/- Konark Commerce & Invest. Ltd. 24.05.2005 17,46,562/- 22.02.2007 to 05.03.2007 43,84,700/- Total 36,84,170/- 5,59,34,000/- Accordingly, the assessee was required to furnish the following information: (i). Copy of D-mat account (ii). Proof of purchase price and sale consideration (iii). Date of purchase and date of sale (iv). Physical delivery of shares (v). Payment of Security Transaction Tax (vi). Proof of the fact that the transaction was entered at recognized stock exchange and proof of payment of purchase price and receipt of sale proceeds. 4. In this regard, the assessee filed written reply on 02.11.2011 and stated that the shares were sold through rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Unit-IV, Kolkata with request to verify the genuineness of share transactions entered into by the assessee through M/s. P.K. Agarwal & Co. The DIT submitted that on the given address, M/s. P.K. Agarwal & Co. was not in existence. Thereafter, a letter was issued to P.K. Agarwal & Co. as per address given in the contract note regarding the transactions done on behalf of the assessee but no reply was received. On perusal of the contract notes, the Assessing Officer observed that there are entries of payment of service tax and entry pertaining to payment of Security Transaction Tax. The Assessing Officer drew inference that these all transactions are in the nature of bogus share transactions as a penny stock. On the basis of sale of shares, the assessee has shown long term capital gains on the bogus sale of shares, thereby converting his own black money into white through P.K. Agarwal and Co. and claimed the same as exempt u/s. 10(38) of the IT Act. It was further noticed by the Assessing Officer from the report of DDIT (Inv.) that M/s. P.K. Agarwal & Co. has been penalized many a times and debarred/restrained from associating with/accessing capital market for doing irregularities in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounts and accordingly an addition of ₹ 2,05,00,742/- is made to the assessee's return income u/s 68 of the Act on account of unexplained cash credit." Accordingly, the Assessing Officer made addition u/s. 68 of the IT Act of a sum of ₹ 2,05,00,742/-. Aggrieved from the above additions, the assessee appealed before the ld. CIT(A), who after considering the detailed submissions of the assessee and the order of the Assessing Officer and relying on the decision of co-ordinate Bench of Tribunal in the case of Mahesh Prasad Agarwal in ITA No. 230/CTK/2008 and in the case of DCIT vs. Pawan Kumar Malhotra dated 08.01.2010 of ITAT Delhi Bench- F, confirmed the order of the Assessing Officer. Aggrieved, the assessee is in appeal before the ITAT. 6. The ld. AR has submitted a written synopsis which reads as under : 1. Ground No. l(iv) of Grounds of Appeal: Without prejudice to the aforesaid, it is submitted that in the assessment years 2005-2006, 2006- 07 and 2007-08, the learned Assessing Officer has made additions of ₹ 2,05,00,742/-, ₹ 86,15,583/- and ₹ 5,21,88,167/- under section 68 of the Act treating the long term capital gain accrued to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of the appellant and also adverse action taken by the SEBI against the stock broker held that appellant had obtained accommodation entry from M/s P.K. Aggarwal & CO. and has introduced money in the garb of the capital gain. It is submitted that merely because the share broker was indulged in malpractices, would not ipso facto lead to a conclusion that sale and purchase of shares through such stock broker is not genuine. It is submitted that M/s P.K. Aggarwal & CO. has not stated that sale and purchase of the shares on behalf of the appellant company is not genuine nor the share broker has ever stated that he has provided any accommodation entry to the appellant company. It is further submitted that before drawing the adverse conclusion, the learned Assessing Officer has placed reliance on the action taken by the SEBI against the share broker. It is further submitted that it is not in dispute the such share broker is registered with the stock exchange and was trading in shares on behalf of the clients. In the instant case, learned AO has also not doubted the sale of the shares to the independent parties. It is therefore submitted that because the share broker is allegedly inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on what has not been disclosed or is not likely to be disclosed before Income Tax Departments. Similarly, while statement during the course of search & seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further in respect of pending assessment proceedings also, assessing officer should be rely upon the evidences/material gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders." [Emphasis Supplied] 1.8 It is thus evident that, it has been directed by the Board that, no addition should be made on the basis of confessions but on the basis of evidences/material gathered during the course of search or thereafter. It is settled law that every officer and person employed in the execution of the Act shall observe and follow the orders, instructions and directions of the Board and as such benevolent circulars are binding on the Income Tax Authorities even if it is deviating from the provisions contained in the Act. 1.9 It is further submitted that even otherwise the reliance placed by the learned officer on the sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) 43 DTR 149 (Agr) Baijnath Agarwal vs. ACIT (pages309-326 of JPB) 1.13 Further, it is submitted that, in the instant case, transaction of sale of shares have been confirmed by all the seven parties and in such circumstances no addition under section 68 of the Act can be made in the hands of the assessee appellant as has been held by the Apex Court in the case of CIT vs. K. Chinnathamban reported in 292 ITR 682, where it has been held by their Lordships of the Apex Court "where a transaction stands confirmed by the third party of an investment no addition could possibly be made u/s 68 of the Act, in the hands of the assessee in whose, books of accounts credit appears". 1.14 It is submitted that the aforesaid judgment is applicable with greater force on the facts of the instant case since all the parties are independent parties, and are tax payee. It has not been found that the parties are not existent. In fact even the bank account shows the existence of the parties. There is no evidence to establish that any money flew from the assessee. The A.O. has not brought any material on record to prove and establish that the aforesaid sum were originated directly or indirectly from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness or fictitious identity of the entries or non capacity7 of the lender. 10. Under these circumstances, we do not find any infirmity or perversity in the order passed by the Tribunal and in our opinion no substantial question of law arises in this case. With the result, the present appeal is not maintainable and the same is hereby dismissed." [Emphasis Supplied] 1.16 The appellant also seeks to place reliance on the case of DCIT Vs Rohini Builders reported in 256 ITR 360 (Guj) wherein it has been held as under: "Thus it is clear that the assessee had discharged the initial onus which lays on it terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this Court. ii) 26 ITR 736 (SC) Dhirajlal Girdharilal v CIT, Bombay When a Court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material iii) 26 ITR 775 (SC) Dhakeshwari Cotton Mills ltd. v CIT The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. Both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid transaction. It is most respectfully submitted that in support of the aforesaid transaction, appellant has produced the following documentary evidences: Sr. No. Particulars Pages (pages of Paper Book) i) Ledger Account of investment in shares 55-56 ii) Share Transfer forms and certificates 58-74 iii) Bank statement of the assessee 75-76 iv) Ledger account of Magnum Steel in the books of the 77 v) asssesseeLedger account of assessee in the books of the 78 4.1 The aforesaid tabulated details clearly establish that the appellant has produced complete documentary evidences in respect of the loss of the shares. It is however submitted that learned CIT(A) without any evidence or material, and merely on the basis of the suspicion has held that there is no commercial prudence involved in selling the unquoted at a loss to sister concern and has held that the transaction being a colorable device to avoid tax and hence cannot be said to genuine transaction. 4.2 It is most humbly submitted that merely because the director of the appellant company is also the director of the M/s Magnum Steel Ltd., the transaction of the sale of the shares by the appellant company ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain vi) ITA No. 1296, 1297/2011 (Del) dated 2.2.2012 CIT vs. International Land Development Pvt. Ltd. 5.2 Lastly the nomenclature by the assessee or the opinion of the auditor cannot be a conclusive basis to disregard and overlook the true nature of the transaction. Reliance is placed on the following judicial pronouncements: i) 82 ITR 363 (SC) Kedarnath Jute Mfg. Co. Ltd. 227 ITR 172 (SC) Tuticorn Alkali Chemicals and Fertilizers Ltd. vs. CIT ii) 285 ITR 221 (Mad) CIT vs. Idhayam Publications Ltd 6 In view of the aforesaid, it is submitted that since the amount received is for the commercial consideration as such same is outside the purview of section 2(22)(e) of the Act. The ld. AR of the assessee also filed a supplementary synopsis in continuation to the above submissions, which reads as under : 1. That captioned appeals are filed by the assessee appellant against the consolidated order of the learned CIT(A) dated 13.08.2014 for the AY 2005-06 to AY 2007-08, whereby learned CIT(A) has substantially upheld the order of assessment. 2. Before the Hon'ble Tribunal, appellant has filed three paper books for each of the aforesaid assessment years containing the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of limitation and further for the AY 2006- 07, return was scrutinized and assessment was also framed u/s 143(3) of the Act on 15.12.2008, wherein returned income was accepted. 4.4 26.03.2010: However, a comprehensive search u/s 132(1) of the Act was conducted on 26.03.2010 at the appellant group of companies namely: i. M/s B.R. Associates Ltd. ii. M/s Magnum Steel Limited iii. M/s Magnum Iron and Steel Ltd. iv. M/s N.R. Sponge Pvt. Ltd. v. M/s Deluxe Alloys Pvt. Ltd.M/s Magnum International Ltd. vi. M/s Triple Stock Shares Pvt. Ltd. vii. M/s Courage Financial Services Pvt. Ltd. viii. M/s Jeevan Jyoti Society. 4.5 It is respectfully submitted that during the course of the search on the appellant company no incriminating material was found from the premises of the appellant. Infact, from the whole group, and from all the place i.e. Delhi. Gwalior, Raipur, Indore, Banmore, only a total cash of ₹ 5,62,635(Rs.5,07,485 from Gwalior and ₹ 55,150 from Delhi Office) was found, out of which only ₹ 5,00,000 was seized. Chart giving analysis of the cash found during search at various places in enclosed as annexure to the synopsis as 'Annexure-A'. 4.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. as in whole statement, nothing incriminating was stated against the appellant. 4.8 In any case and without prejudice to the aforesaid that statement of Shri. Jindal and Shri. Aseem Kumar Gupta is not incriminating against the assessee, it is respectfully submitted that immediately after the search i.e. on 29.03.2010, (as 27-03-2010 was Saturday and 28-03-2010 was Sunday), aforesaid statement of Shri. Jindal was retracted when Shri. Jindal met with the DGIT(Inv) stating the circumstances under which statement was recorded and retracted the statement recorded during the course of search and also requested to not to deposit the cheques in respect of alleged surrender. The Shri. Jindal on the same date also met with ACIT (Inv) and stating the aforesaid facts, requested to return the cheques, and learned ACIT(Inv) assured not to use the cheques, but did not return the cheques. It is submitted that because of the aforesaid retraction, the cheques given by Shri. Jindal in respect of the tax liability on account of surrendered sum were never deposited. 4.9 In pursuance to the aforesaid search, learned AO issued notices under section 153A of the Act on 20.04.2011 and framed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions Pvt. Ltd. in lieu of cash received on his instruction from his office. I arranged a deal of capital gain amounting to ₹ 20 crores between Magnum Steel Limited and Shri. Santosh Shah r/o Lai Bazar, Kolkata (Mobile no. 09830053858) in lieu of cash received from his office. This money was handed over to me by employees of M/s Magnum Steel limited whose name are Shri. Som Nath. Shri Som Nath was introduced me by Shri. I.C. Jindal, MD Magnum Steel Limited. I gave ₹ 20 crores to Shri Santosh Shah who arranged capital gain for Shri. I.C. Jindal and his company through stock broker Sh. P.K Aggarwal resident of Kolkata. " 4.12 From the perusal of the aforesaid statement of Shri. Aseem Kumar Gupta, it would be seen that there is no reference of the assessee at all. Further in respect of statement of Shri. Jindal is concerned, in fact in the whole statement, no statement has been made in respect of the assessee. And further observation of the AO that the allegation of Shri. Aseem Kumar Gupta was not denied by Sh. Jindal, is again factually incorrect as immediately after the search, i.e. on 29.03.2010, aforesaid statement dated 26/27.03.2010 was retracted. Infact, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase in view of aforesaid forceful surrender and statement of Shri Aseem Gupta, CA and Shri Somnath, employee of M/s Magnum Steel Ltd be taken in my presence by giving opportunity to cross examining them before drawing any adverse view on the basis of forced surrender made by me as well as forced statement taken from Shri Aseem Gupta as neither any money transacted between Shri Somnath my employee and Shri Aseem Guota nor any dealings of shares were made through Shri Aseem Gupta. In fact, Aseem Gupta already denied having any relationship with P.K. Aggarwal & Co. during the course of statement recorded during search. The shares were purchased and sold only through broker P.K. Aggarwal & Co., Kolkata " 4.13 It would be seen from the aforesaid reply that it has specifically been submitted that statement made during the course of search was not voluntary and statement of Shri. Aseem Kumar Gupta and Shri. Somnath be taken in the presence of the assessee by giving opportunity to cross examining them before drawing any adverse inference on the basis of forced surrender made by Shri. Jindal as well as forced statement taken from Shri Aseem Gupta. It is also relevant to state that no corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement is not incriminating qua the assessee and in any case, such statement was recorded under duress and same has also been retracted immediately after the search, as such, such statement cannot be made the basis of making the addition. 5.1 It is submitted that statement of Shri. Jidnal was recorded whole night and next day in the morning he was made to surrender, which itself shows that such statement is not voluntary and was recorded under duress. Aforesaid submission is supported by the judgment of the High Court of Gujarat in the case of Kailashben Manharlal Chokshi vs. CIT reported in [2010] 328 ITR 411 (Gujarat), wherein also statement of the assessee had been recorded under section 132(4) at mid night, and such statement was also retracted after a lapse of two months and learned AO did not accept the retraction and accordingly, made an addition representing income disclosed by the assessee under section 132(4). On appeal, the Commissioner (Appeals) and the Tribunal upheld the impugned addition. However, the Hon'ble High Court reversed the finding by holding as under: "22. We have heard learned counsels appearing for the respective parties at great length and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has immediately been retracted same cannot be treated as incriminating material. It is submitted that in the instant case, apart from the retracted statement of Shri. IC Jindal, and unsubstantiated allegation of Shri. Aseem Kumar Gupta, no material was found from the premises of the appellant. It is submitted that in fact in the case of CIT vs. Harjeev Aggarwal reported in [2016] 70 taNmann.com 95 (Delhi), it has been held that statements recorded during search and seizure operations are not evidence found as a result of search. However, it was held that the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 5.3 Further in the case of Commissioner of Income-tax v. Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) d. CIT V SMC Share Stock Brokers 288 ITR 345 (Del) e. CIT V S M Aggarwal 293 ITR 43 (Del) f. CIT vs Dharam Pal Prem Chand Ltd 295 ITR 105(Del) g- CIT Vs Pradeep Kumar Gupta 207 CTR 115 5.5 It is further submitted that it is settled law that where addition of undisclosed income was made on basis of mere statement under section 132(4) which was not corroborated by any material evidence, neither such statement would be a conclusive evidence, nor any addition could be made. It is submitted that in Instruction No. F no. 286/2/2003- IT (Inv) dated 10.03.2003), the CBDT has directed that, "Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of search & seizure and survey operations. Such confessions, if not based upon reliable evidence, are later retracted by the concerned assessees while filing return of income. In these circumstances, on confessions during the. course of search & seizure and survey operations do not serve any useful purpose. It is, therefore advised that there should be focus and concentration on collection of evidence of income which leads to information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Furthermore in the case of G. Chinna Yelllappa vs ITO in ITA No. 268 of 2003 dated 6.11.2014, Hon'ble Andhra Pradesh High Court has held as under: "It is not as if the retraction from a statement by an assessee would put an end to the procedure that ensued on account of survey or search. The Assessing Officer can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. " 5.8 In the case of CIT vs. Sint. S. Jayalakshmi Ammal reported in [2016] 74 taxmann.com 35 (Madras), Hon'ble High Court has held as under: "20. In the case on hand, statement recorded on 29.12.1999 from the son of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, no addition can be made on that score alone. Therefore, in our opinion, the impugned addition cannot survive, and the same has to be deleted." [Emphasis supplied[ Reliance is placed on the following judgments: i) 247 ITR 448 (Bom) CIT vs. Vinod Danchand Ghodawat ii) 185 Taxman 18 (Chd) Jagdish Chander Bajaj vs. ACIT 5.10 In view' of the aforesaid, the submission of the appellant is that, the additioncan be made only qua the incriminating material found as a result of search;which is none in the instant case. Reliance is placed on the judgment of Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla reported in 380 ITR 573 wherein their Lordships have held as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been made to the income already assessed." [Emphasis supplied] 5.11 Infact, in the subsequent judgment in the case of Pr. CIT v. Lata Jain reported in 384 ITR 543 (Del)), it was also held that in absence of any incriminating material found as a result of search, assumption of jurisdiction was also not in accordance with law. Reliance is also placed on the following judgments: i) ITA No. 369/2015 CIT vs. Kurele Paper Mills P Ltd. dated 06.07.2015 ii) 63 taxmann.com 137 (Del) CIT vs. MGF Automobiles Ltd. iii) ITA No 634/2015 Pr. CIT vs. Smt. Kusum Gupta dated 01.09.201 iv) 49 taxmann.com 172 (Bom) CIT vs. M/s Murli Agro Products Ltd. v) ITA No. 1969 of 2013 CIT vs. All Cargo Gobal Logistics Ltd. vi) 58 taxmann.com 78 (Bom) CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. vii) 259 CTR 281 (Raj) Jai Steel India vs ACIT viii) 120 DTR 79 (Bom) CIT vs. Sinhgad Technical Education Society ix) W.P. (C) 8721/2014 & CM No. 20052/2014 Praveen Kumar Jolly 5.12 Recently Hon'ble Delhi High Court on 25-05-2017 held in ITA No. 306 to 310 of 2017 in the case of Pr.CIT V. Meeta Gutgutia Prop. Ferns N Petals, again analyzed all the aspects and the decisions laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was specifically taken under scrutiny to examine the investments. 35. In AY 2006-07 also assessee has declared long term capital gain in the return of income and the AO while making the assessment u/s 143(3), has made disallowance of LTCG by treating them as STCG and addition of ₹ 36,72,01,641/- was made. In the assessment made u/s 153A of the Act, the AO has treated the same figure that was already added during the 143(3) assessment as undisclosed income. It is not understood the income already disclosed, how can be treated as undisclosed. Here again Revenue has failed to refer to any material unearthed during the search which could led ld. Assessing Officer to such conclusion. This assessment can only be disturbed as we discussed in the preceding paragraphs above, if any incriminating material is found during the course of search, but not otherwise. 36. In AY 2007-08, originally the Assessing Officer framed assessment also u/s 143(3) of the Act by making a disallowance of ₹ 3,06,421/- u/s 14A of the Act r/w Rule 8D. in the assessment u/s 153A AO has merely repeated the disallowance without referring to any incriminating material unearthed during the search. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08. 39. Ld AR has claimed that the examination of Shri. IC Jindal was started after the search whole day at all the places at late evening hours of 26.03.2010 at 8.40 PM, which continued for whole night, and merely 7 questions were asked till midnight on the investment of properties and also investment in shares of various companies. Question no. 7 was in relation to details of various immovable properties as per details furnished by Smt. Shashi Prabha Jindal, wife of Shri. IC Jindal to income tax department who assessee claimed, had strained relationship with Shri. IC Jindal as she had filed civil and criminal cases against him. Other few questions were asked in the night till morning, as date was mentioned 27.03.2010 thereafter. Shri. Aseem Gupta was called in the morning of 27.03.2010 when he stated that he has given ₹ 2 crores from M/s Moderate Credit Corporation Ltd. and ₹ 80 Lacs from M/s Ravnet Solutions Pvt. Ltd. in lieu of cash to the assessee. He further stated that he has received ₹ 20 crores in cash for arranging capital gain. He stated cash was received by him from Shri Somnath, employee of the assessee company. It was stated by him that cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon. SC has held that : "6.According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that crossexamination of the said dealers could not have brought out any material which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us could not submit any evidences that the retraction statement is not authentic. Further revenue has no answer why it took the cheques for taxes when it is so sure of the undisclosed income and further not deposited the same at all leave aside on time. All these cumulative factors go strongly in favour of the assessee about its timely retraction of the admission. 44. We find that the statement was recorded at odd hours and nothing concrete related to any other evidence in support arrived at. The figures of investment made by the companies were not matching with the statement of Shri. Aseem Gupta as assessee has not received any sum from M/s Moderate Credit Corporation Ltd. and further only a sum of ₹ 71 lakhs as against ₹ 80 lakhs (stated by Shri. Aseem Gupta) has been received from M/s Ravnet Solutions Pvt. Ltd. as share application money. Despite referring name of Shri. Somnath and Shri. Santosh Shah and the broker Shri. P.K. Aggarwal & Co. in the statement, nobody was ever examined by the revenue despite time and again Shri P.K. Aggarwal confirming the transactions. The revenue cannot make allegation unless prove them by brining tangible material on record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and retraction in writing was only on 16/12/2010. Therefore Hon high court held that retraction is too much delayed and not bonafide. Facts in that case were as under :- "11. The facts of the case on hand are plainly different. Here, there was no statement of the assessee recorded during the survey under section 133A of the Act. As observed by the Commissioner of Income-tax (Appeals), the assessee voluntarily made a declaration two months after the survey. There was absolutely no compulsion on the assessee to make such a declaration. The assessee waited for two years to resile from the said declaration. The submission of learned counsel for the assessee that since he had filed a return on September 26, 2009 without disclosing the sum of ₹ 1.25 crores, he should be deemed to have resiled from the said declaration cannot be accepted. The retraction in writing happened only on December 16, 2010. It was much too delayed to be taken to be bona fide. The circumstances under which the retraction was made has also not been explained. The court finds that the above retraction, without any explanation whatsoever, and without mentioning the offer of surrender of ₹ 1.25 crores m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment u/s 143(3) in AY 2006-07 and 2007-08 and which were merely repeated in the order u/s 153A of the Act. In AY 2005-06, additions made also are not related to incriminating material. We have repeatedly held that no addition can be made in the absence of incriminating material and our view was further strengthened by the Hon'ble jurisdictional High Court in the case of CIT v. Kabul Chawla reported in 380 ITR 573 (Del.) which was further followed in subsequent decisions. All these decisions propounded the law that no additions can be made in absences of incriminating material for each of the years and on that basis, addition u/s 153A by the revenue for AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. We therefore hold that additions made u/s 153A of the Act, in the absence of incriminating material found as a result of search is outside the scope of section 153A of the Act and the additions in all these three assessments framed u/s. 153A of the Act i.e. ITA No. 1342/Del/2013, 1343/Del/2013 & 2004/Del/2013, do not stand and directed to be deleted. In result, appeals are allowed." Since the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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